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Latham & Assocs., Inc. v. William Raveis Real Estate, Inc., 218 Conn. 297, 589 A.2d 337 (1991) (full-text)
Factual Background Edit
William Raveis Real Estate ("Raveis") sought a computer system to provide efficient interconnection between its own multiple offices and various banks with which it dealt. Latham & Associates (Latham) undertook to provide two computer systems that would meet those needs. The parties entered into two contracts for the delivery of the computer systems. Due to its dissatisfaction with the performance of the software tendered under the contracts, Raveis did not fully pay the license fees or software support charges for the mortgage system.
Latham filed suit to recover the unpaid purchase price for the computer hardware and software delivered to Raveis. Raveis claimed misrepresentation and breach of warranty and sought in a counterclaim to recover damages as well as the return of monies paid to the vendor. The Trial Court found the issues for the purchaser but limited the recovery to $81,500, representing a return of its payments for software.
Latham appealed to the appellate court, which transferred the appeal to the Supreme Court of Connecticut.
State Supreme Court Proceedings Edit
Expert testimony is generally required "when the question involved goes beyond the field of the ordinary knowledge and experience of judges or jurors." The trial court concluded that expert testimony was not required in this case because the purchaser’s burden of proof was attenuated by virtue of the trial court’s finding that the purchaser’s right to return of the software purchase price was grounded on the purchaser's proper exercise of its right of rejection. Breach of express warranty for computer systems could be established without expert testimony to identify cause for system’s generation of inaccurate data, where the case was grounded on the buyer’s right of rejection, rather than revocation of acceptance. The purchaser did introduce some expert testimony about deficiencies in certain aspects of the software program and relied on representations by the seller that included a promise of support services that inferentially encompassed some of the seller's responsibility for the work product of the buyer’s employees.
To sustain its affirmative defense that the purchaser’s counterclaim was time barred, Latham had to establish the purchaser’s noncompliance with the requirements of C.G.S.A § 42a-2-725. The vendor had the burden of proving the date on which "tender of delivery was made." The vendor failed to satisfy this burden.
Execution of the contract for a second computer system did not discharge obligations previously assumed by the seller in the contract for the first system, despite a merger clause in the second contract. Although the mortgage system contract contained a merger clause indicating that the written document was intended as a definitive integration of the agreement of the parties concerning the mortgage system, the trial court was entitled to find that the parties did not intend the execution of the mortgage system contract to supersede the first contract. The vendor’s assertion that an acceptance form signed by an employee of the purchaser constituted a waiver of all outstanding contract claims relating to the real estate system contract was rejected.
The vendor could not contend that the buyer was required to plead in its complaint the requirements for effective rejection during trial. Until the possibility of a cure had been exhausted, the purchaser did not have the opportunity to make the final inspection that is the prerequisite to an implied rejection. Despite the execution of the acceptance form by an employee of the buyer who had no authority to bind the buyer in this respect, the buyer never in fact accepted the software, and the buyer’s ultimate rejection and accompanying notification of the seller were seasonable.
Seller, by its representation that it would develop a software system that would suitably meet buyer's demonstrated needs, gave an express warranty that could be actionable despite existence of restrictive contract clauses. Parol evidence about express warranties was admissible; despite the seller's contention that the contract for the computer system was a complete and integrated agreement, where the seller had misrepresented the extent of its expertise in development a working computer system. Misrepresentation undermines the intentional adoption of an integrated writing that is an ssential prerequisite to invocation of the parol evidence rule.
The Connecticut Supreme Court held (1) a breach of express warranty for computer systems could be established without expert testimony to identify the causes of the system’s generation of inaccurate data; (2) the statute of limitations had not run; (3) execution of a contract for a second computer system did not discharge the obligations previously assumed by the seller in the contract for first system; (4) the buyer’s rejection was seasonable; and (5) the warranties were enforceable.